Are you panicking because Jeff Sessions repealed the Cole Memo?

You’re not alone.

Most recreational users (especially those in California) became worried about the “legalization of marijuana” once Sessions repealed the Memo. It was only 3 days after California issued recreational licenses and it was obvious people in the industry got real nervous.

We are here to tell you the real truth – the Cole Memo doesn’t protect marijuana.  At all

At the Weed Initiate, we are lucky to have in-house counsel, James Shih, who has taken a closer look so we could explain more about why the Cole Memo isn’t what you think it is! We’ve directly interpreted the actual text of the memo from the U.S. Department of Justice and found that it’s exactly what a memo is – guidelines on how to conduct business.

 

Common Misconceptions of the Cole Memo

If you thought that the Cole Memo prevented the federal government from acting against recreational cannabis companies in your state or any of these – you are wrong (don’t worry, we won’t judge!).

The Cole Memo is/does not:

  • Magical implicit approval from the federal government to use marijuana
  • Dictate how funds were issued to the federal government to deal with cannabis
  • Cut funding when trying to arrest compliant cannabis companies
  • Federal law that prohibited prosecution provided all state laws were followed
  • Prohibited federal legal action against state legal cannabis companies

In 2014, Former US Attorney, James Cole, drafted the memo to let the Department of Justice employees know which cannabis businesses to prioritize when it came to prosecution (told the DOJ who they should arrest first).

Imagine there are 1000 cannabis cases and only 1 Judge who can hear at most, 1 case per day. 500 of those cases violate one or more of the 8 Cannabis Commandments mentioned later and the other 500 are just your average cannabis business following state laws.

What the Cole Memo did was gave guidance saying “we don’t have the resources, so go try the 500 who violated a cannabis commandment first, the rest just put on the back burner for now.”

 

Cole Memo Summary: It Just Gave Guidance to DOJ

Sounds absurd, doesn’t it?

Thousands filed applications with their state and opened for business by the encouragement of the Cole Memo when in reality, the Cole Memo only states:

“As with the Department’s previous statements on this subject, this memorandum is intended solely as a guide to the exercise of the investigative and prosecutorial discretion.”

That’s it. The Cole Memo is just a memo! It just gave guidance on how the Department of Justice Employees should spend their time and resources.

Think of the DOJ just like any other company (of course with a lot more power): there’s the big boss (Jeff Sessions), his managers (U.S. District Attorneys), and then the employees underneath his managers (all the other little peons).

Imagine you are a DOJ employee and your boss releases a memo which says “everyone should first focus on arresting Cannabis business who violates one of our 8 objectives.  If they’re compliant, let’s leave them alone.”

As a DOJ employee, you would definitely focus on arresting the cannabis businesses which have any of the 8 problems. However, if you did not like all Cannabis operations, nothing will stop you from going after businesses in compliance with state laws. Recreational cannabis was and is still illegal under federal law. Sorry, but the Cole Memo doesn’t protect medical marijuana either.

 

Does the Cole Memo affect Medical Cannabis?

Yes, it is affected because Medical Cannabis is also illegal. However, while the Cole Memo laid out guidelines for how to prosecute Cannabis as a whole – Medical Cannabis is still in a better position until March 23.

Why? Because the Rohrabacher-Blumenauer (aka the Rohrabacher-Farr) Amendment, IS a law in the United States.

While the Rohrabacher-Farr Amendment did not legalize medical cannabis, it does prevent use of federal funds from the bill to be used to prevent states from implementing their own laws legalizing medical marijuana.

The amendment passed in 2014 and has been extended 8 times since then due to Congress not passing a new federal budget since 2015.  However, this last time it was only extended into March and could potentially be a big issue when spending is brought up again.

The cole memo also helps CBD products feel more legitimate. As an example, view how this brand is tackling CBD for dogs to find a niche opportunity..

What’s the difference between the Cole Memo and the Rohrabacher-Farr Amendment?

The biggest difference is that the Rohrabacher-Farr Amendment is a law and the Cole Memo was just guidance.

Think of the Rohrabacher-Farr amendment like an actual policy of a company set by the board of directors; and the Cole Memo is exactly like that scene from Office Space about putting the new cover sheets on your TPS reports.

As a DOJ employee, if you violate the Rohrabacher-Farr Amendment, you would be fired for sure – you violated a policy of the company. If you didn’t follow the guidance of the Cole Memo, you might be yelled at but there was no punishment.

The second difference is the meaning of the text and its impact on the DOJ.

The Rohrabacher-Farr Amendment explicitly states “none of the funds made available in this Act to the Department of Justice may be used… to prevent any of them from implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.”

Simply put, by federal law, a DOJ employee could not be paid by the funds in the bill to interfere with medical marijuana company following its state’s laws.

This means “hands off!”

On January 19, 2018, we all saw what happens when money isn’t given to the federal government to run. The entire government literally shuts down. Employees don’t go to work, visas don’t get processed, the IRS furloughs half of its workers, help lines are shut down, national parks close, tables are flipped, babies cry, and people die (no joke, even senators say so).

So unless you really hate cannabis, agree to work unpaid overtime as a government employee, and that you will never receive any payment, support, or federal government backup – medical marijuana companies that follow their state laws probably will not be prosecuted.

In contrast, the Cole Memo is just the interoffice memorandum that the Attorney General sent out on email telling the DOJ minions to focus on violations of the Eight Cannabis Commandments.

What are the Cannabis Commandments, you ask?

 

Our Eight Cannabis Commandments

There are 8 violations the Cole Memo indicated should be a priority for the Feds to focus on making sure they would try to put behind bars, which we are lovingly calling the Eight Cannabis Commandments. (We’ve also added “Don’t do’s” of what they mean in italics for the Cannabis industry.)

  1. Preventing the distribution of marijuana to Minors; (Don’t sell to children)
  2. Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels; (Don’t give profits to a gang, cartel, mafia, etc.)
  3. Preventing the diversion of marijuana from states where it is legal under state law in some form to other states; (Don’t transport marijuana across state lines.)
  4. Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; (Don’t start a meth delivery service using marijuana as a coverup – or something similar.)
  5. Preventing violence and the use of firearms in the cultivation and distribution of marijuana; (Don’t have guns around and don’t rob other people with guns – play nice.)
  6. Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use; (Don’t Drive High, its a DUI)
  7. Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and (Don’t grow marijuana in Yellowstone National Park – or any other public location.)
  8. Preventing marijuana possession or use on federal property. (Don’t have or use marijuana if you are on any federal property.)

 

Are California Cannabis Businesses in Danger?

Legally, no more or no less than it was during the Cole Memo era.

In reality, it’s likely going to depend on how your local U.S. Attorney views marijuana. As it should be clear now, the Cole Memo was never a law.

California Cannabis Businesses have always faced potential federal criminal liability. However, we are of the mindset that if 64% + of America approves of Cannabis, Jeff Session’s attempt to destroy the Cannabis industry may have the exact opposite effect in California.

Jeff Session’s repeal of the Cole Memo coincidentally occurred 3 days after recreational marijuana became legal in California and has been viewed like a personal attack.  In response, California as a state is standing strong to oppose prosecution of California Compliant Cannabis businesses.

However, one thing is for sure, California Cannabis Companies that are not trying to follow state laws face a much higher risk in this former black market of California.

People trying to make millions in Cannabis and think that hiding their illegal cannabis business is safer than trying to be legal are just stupidly irrational. This is the criminal mindset and why TWI is offering free California Cannabis Business Compliance assessments to California Cannabis Companies trying to follow California state laws.  Yes, California attorneys are expensive in the Cannabis industry but TWI is doing compliance for free.

Our goal is to bring a white collar approach to a former black market.

 

“California intends to ‘vigorously enforce our state’s laws and protect our state’s interests’.”

– Xavier Becerra, California Attorney General

 

Example of Cannabis Business Options

In TWI’s opinion, Cannabis Businesses should consider the negative of Becerra’s statement – if a cannabis business is NOT following state laws – you’ll be given up first. If you aren’t even trying or taking steps to follow state laws you’ll have to face the California enforcement and the Federal enforcement. Protecting the state’s interests also means California wants to make sure they are making money off the Cannabis industry.

Imagine if you will there are two cannabis companies…

Two CA Cannabis Business “Business 1” and “Business 2”. They each make $1 million a month from selling Cannabis, each are located in San Diego, both are operating during normal business hours. The only big difference is that Business 1 does not care about following MAUCSRA and San Diego Cannabis laws and Business 2 actually cares and is licensed by San Diego and MAUCSRA.

On the Local San Diego Level

San Diego Police officers will already know Business 2 as they are licensed and will likely not bother them. Eventually, they will find the illegally operating Business 1 because the average consumer may rat them out when they get don’t realize Business 1 was not operating legally.  Incentive wise, Business 1 faces massive financial penalties which will need to be paid to San Diego. It makes it very lucrative for San Diego to shutdown an illegally operating cannabis business making $12 Million a year.

On the California State Level

Now that Business 1 and Business 2 are both on the radar, California knows Business 2 has paid their fees, and there is no financial benefit to shutting them down. In fact, Business 2 is making money for the state of California and there is a huge benefit to keeping them safe.

In contrast, Business 1 may have years of taxes unpaid, license fees unpaid, and who knows what other financial benefits there are for the California State being missed.

On the Federal Level

Since Business 2 is making California and San Diego money, they are doing their best, California has already stated that it will “vigorously enforce our state’s laws and protect our state’s interests.”

In contrast, Business 1 which is not following any laws and instead tried to operate under the radar is #1, a target for local San Diego and California law enforcement. There is no interest by California to protect Business 1.

Instead, when the Federal Government asks California for illegal cannabis offenders, Business 1 who is not following any laws or is even in the process of trying to becomes Business 2’s scape goat. California can comply with the request by providing the law-breakers first.

 

How does it affect California Cannabis?

Your Local U.S. Attorney in your district has the right to go after Cannabis businesses how they see fit. 

So, if your local U.S. Attorney is pro-marijuana, this could be great news for you as it means that they’ll likely keep following the Cole Memo as a devout believer in the 8 Cannabis Commandments.

On the other side, this also means that if you have an anti-marijuana U.S. Attorney, like Sessions himself, this could be really bad for your local cannabis businesses.  Even in California, the San Francisco U.S. Attorney’s office is the only one in California with no anti-marijuana affiliation.

There might be a chilling effect on new Cannabis businesses out of fear of increased federal enforcement but this also means that companies willing to go legal and rely on California’s statements may ultimately find less competition to get to the top.

However, if you are NOT following California local and state laws, you face the federal prosecutors alone without any backup by California.

This is why TWI was created.

Just as California leaders have promised to defend and protect companies which follow their laws, it requires California Cannabis consumers, businesses, and workers to defend their rights by following the California Recreational Cannabis Laws

For our Weed Initiates, we want them to have an idea of which companies are on the path to being fully legal and avoid those which are operating like drug dealers. We want to encourage Cannifornians to grow together and create turn this former black market into a white one.

2018 promises to be a very interesting and important year for Cannabis in California. TWI thinks that Jeff Sessions’s repeal of the Cole Memo didn’t really do much and might actually be beneficial for the Cannabis industry – it will create intense resistance from already legal states which don’t want to lose out on multi-billion dollar industry because of well, someone even Trump calls an idiot.

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As Always, Toke and Grow Safely